However, after balking last year – when gold retreated 28% – the precious metal is once again shimmering on investor horizons. It gained 6.6% in February, the most since July last year, raising bullish bets.
It could still be too early to herald a full recovery of gold. The US economy did not accelerate as expected in the fourth quarter last year, restraining gold from gaining momentum into 2014.
But there are indications that it could be time to add a glimmer to portfolios: in the IMA’s monthly top-performing funds sector for February, gold mining funds were the strongest contenders.
“Gold miners led the way in February, continuing their recovery which began in January. The gold price seems to have stabilised, companies have changed senior management, reduced costs and improved their focus on shareholder returns. This focus on cutting costs and improving returns should feed through to profitability in the next few years,” according to Adrian Lowcock, senior investment manager at Hargreaves Lansdown.
The dollar has fallen off in recent weeks amid Federal Reserve stimulus and the gold price was pushed higher. As stimulus looks set to remain, it remains to be seen whether the bullion will be driven up further or not.
"The negative sentiment around gold appears to be subsiding, with the metal increasingly being viewed as insurance against potential market uncertainties, such as further emerging market turmoil or US equity market volatility. Outflows from ETFs, which were so influential last year, have stabilised and positioning in the futures market has also turned more positive," Evy Hambro, manager BlackRock Gold and General Fund commented.
